Extending the Concept of Delayed Gratification to Retail Start-ups in India: An Imperative Strategy for the Success, Long-Term Sustainability, and Protection of Founding Members’ Majority Shareholding

Abstract

By definition, the key objective of an organized investor is to commit capital with an expectation of financial returns within a specified period. This definition neither explicitly nor implicitly indicates the moral ways through which such financial returns are to be expected. Thus, the founding members of any Retail start-ups in India need to be cognizant of the fact that the key objectives of external organized investors are contrary to the founding members’ objectives of building a successful firm. This study demonstrates that the founding members of Retail start-ups in India knowingly or unknowingly distance themselves from understanding such objectives of investors, they are constantly reaching out to fund their start-ups. We have noticed that the most important aspects that have given the highest attention by the founding members (implicitly influenced by organized investors’ ideology) and have a greater significance in the failure to protect the majority shareholding in the firm revolve around (i) Quick reward; (ii) Short-term reward; (iii) Immediate reward; (iv) Impulsivity and rapid decision-making for the reward; (v) A desire for prodigious financial returns. And the only strategy that has a significant association and determination in getting rid of such aspects is the concept of Delayed Gratification (DG) i.e., ‘a person’s ability to resist either a smaller or immediate reward to receive either a larger or more enduring reward later’. This study indicates that even after ten years of operation, the founding members with high levels of DG were able to retain more than 65% of their original shareholding with a relatively better financial performance of their firm whereas, founders with lower levels of DG were able to retain less than 5% and founders with no DG are no more holding any shareholding of the startup they founded. Besides finding evidence of the DG strategy’s role for the founding members, our results are also consistent with the arguments, suggestions, and recommendations of Cognitive, Biological, Psychodynamic, Social, Behavioral, and Developmental psychologists. However, our findings are contrary to Evolutionary theorists.